The regulatory function of the tax and its legal support

Kurkina Natal'ya Viktorovna Lecturer; Department of Theory of Law and Public Law Disciplines; Volgograd Institute of Management - branch of RANHiGS postgraduate student; Department of Theory of Law and Public Law Disciplines; Volgograd Institute of Management - branch of RANHiGS Chief specialist of the Office of the Commissioner for the Protection of the Rights of Entrepreneurs in the Volgograd region; GKU HE 'Directorate for Ensuring the Activities of Public Chambers of the Volgograd Region and the Institute of Commissioners in the Volgograd Region' 400066, Russia, Volgograd region, Volgograd, Central district, Gagarin St., 8 nKurkina-98@yandex.ru

Introduction

Based on the provisions of the current Tax Code of the Russian Federation, as well as the Constitution of the Russian Federation, the fundamental function of the tax is the fiscal function. Historically, it was the maintenance of the state that was the main purpose of tax collection.

However, in the process of legal and economic development of the state mechanism, as well as the taxation system, the introduction of taxes is not conditioned solely by the purpose of replenishing the budget and implementing the fiscal function. Taxation also implements other functions assigned to it by the legislator, in particular the function of regulating economic and social processes in society. N. I. Khimicheva drew attention to this.: "taxes can also be a strong regulatory mechanism in the social management system" ^[24]. A. A. Trivus also noted that "taxes can be an instrument of economic policy along with other means – active banking policy, customs duties, regulation of joint-stock companies. Taxes are equated to one of the components of the forces that determine the resultant by which the evolution of a market economy takes place" ^{[21, p. 49]}.

The problems on this topic have been studied by such authors as K. A. Tasalov, N. I. Khimicheva, A.V. Bryzgalin, V. R. Bernik, A. N. Golovkin, G. V. Petrova, K. S. Belsky, D. G. Chernik, G. B. Polyak, A. N. Romanov, I. I. Yanzhul, A. A. Batarin who conducted the research regarding the classification of tax functions. The study of individual tax functions and their place in the system of tax functions was carried out by such authors as S. G. Pepelyaev, O. N. Gorbunova, A. A. Kopina, M. N. Karasev.

The following authors studied the direct regulatory function of taxes and its impact on economic and social processes: A. A. Trivus, V. A. Parygina, A. A. Tadeev, N. S. Bondar, I. I. Kucherov, A. A. Titov.

In the course of the research, using the formal legal (dogmatic) method in combination with general scientific methods such as analysis, synthesis, description, generalization, the positions of the authors on the topic of tax functions, their classification, as well as points of view regarding the place of the regulatory function in the general system of tax functions were studied.

Based on the positions of the above-mentioned authors, as well as through the use of the deduction method, the classification of the subfunctions of the regulatory function of the tax is derived, as well as the definition of the tax function is formulated.

The use of the comparative legal method was expressed in the comparison of instruments for discouraging and stimulating public relations in the USSR and currently in the Russian Federation.

The results of the study

Both economists and lawyers are engaged in the study of the tax function, since taxation and the way the tax system is built by the legislator directly affect all spheres of public life to one extent or another, with the aim of creating, changing or abolishing certain public relations. A. A. Batarin suggests understanding the "direction" of the tax function. the legal impact of the norms of tax law on public relations, which has consistency, reveals the essence of the tax and implements the social purpose of the state. Also, tax functions are ways to achieve certain goals as a result of the functioning of the taxation system"^[1].

Thus, A.V. Bryzgalin notes that "tax is a complex category with both economic and legal significance" ^{[11, pp. 60-61]}, considers tax to be a multifunctional phenomenon and identifies the following tax functions:

"is a fiscal function, the purpose of which is to accumulate the financial resources of the state to ensure its functioning, as well as the implementation of government programs;

-the distributive function, through which the redistribution of budget funds received in connection with the collection of taxes and fees from individuals and legal entities takes place.;

-the regulatory function of taxes, the implementation of which provides influence through taxation on various spheres of public life;

- a control function through which control over the financial and economic activities of individuals and legal entities is ensured;

-an incentive function that provides support for social facilities through taxation" ^{[4, p. 48]}.

G. V. Petrova also identifies eight functions of taxes: "constitutional, fiscal, incentive, control, intersectoral, legal and foreign economic" ^{[15, pp. 45-46]}.

K. S. Belsky defines tax functions as "certain social roles that they perform in the activities of the state and society." At the same time, the author highlights such tax functions as fiscal, distributive, stimulating and political ^[2].

V. A. Parygina and A. A. Tadeev, when studying this issue, identify four main functions of a tax: "fiscal, regulatory-stimulating (stabilizing), social, information and control"^[13].

On the contrary, both D. G. Chernik ^{[18, p. 29]}, G. B. Polyak and A. N. Romanov ^{[12, p. 13]} believe that the nature of tax functions is bifunctional, distinguishing only fiscal and regulatory functions among tax functions, which absorb other functions.

As A. A. Kopina rightly notes, "taxes of the tax system, along with the fiscal system, can perform additional functions, therefore, the introduction of a tax (transformation of an existing one) should be assessed not only in terms of the amount of funds that can flow into the budgets of the budgetary system, but also based on these additional functions" ^[8].

It seems that the approach of multifunctional tax functions is more relevant at the present time, when legal relations are developing against the background of economic, social and political processes influenced by taxation. Some authors associate this evolution of tax functions with the development of modern statehood and the need to use more civilized instruments of state intervention in economic and social processes ^[10]. Thus, O. N. Gorbunova notes that "by the end of the 19th century, the new concept of taxes considered them as a social regulator, an instrument of reform, and by the end of the 1930s, taxes were already considered as a means of regulating the economy and ensuring stable economic growth" ^{[23, pp. 181-182]}. For example, in Russia, the development of a market economy, the consolidation in the text of the Constitution of the Russian Federation of provisions on freedom of economic activity and private ownership, as well as the concept of a rule-based democratic state served as a starting point for the development of new instruments of tax impact on economic and social processes in the state.

Therefore, the allocation of additional tax functions along with regulatory and fiscal functions is justified. For example, the position that the control function is absorbed by the fiscal function of the tax seems to be erroneous, since currently the institute of tax control contains many developed tools that allow the state to analyze and monitor the economic activities of both legal entities and individuals, conducting inspections for each individual type of tax has its own specifics. I. I. Kucherov notes the following on this issue: "the regulatory and control functions of taxes specify the control function of finance and serve tax regulation and tax control – related areas of financial activity of the state" ^{[9, pp. 133-134]}. Evstigneev E. N. also points out that "the control function of taxation allows the state to "monitor" the timeliness and completeness of tax payments to the budget, compare their amount with the need for financial resources and, ultimately, determine the need to reform the tax system" ^{[6, pp. 9-10]}.

The social (distributive function) referred to by a number of authors has mechanisms that exclude the regulatory component and aim only at socially oriented redistribution of tax revenues. Thus, the current legislation establishes increasing coefficients for calculating the transport tax for certain models of cars owned by the taxpayer. In this case, there is no goal of the legislator to stimulate or discourage any behavior of the taxpayer, and therefore, it seems that the social function of the tax is also not absorbed by the regulatory one.As N. S. Bondar notes, "it is at the expense of funds from tax collection that the observance and protection of citizens' rights and freedoms, as well as the implementation of the social function of the state, should be ensured" ^[3].

Based on the above, it seems that the allocation of the social function of taxes as an independent one is justified. The distribution of finances received by the state as a result of paying taxes "allows not only to equalize the property status of various segments of the population, but also to provide the necessary financing for those areas that are important and necessary for the state and society, but by definition are low-income or extremely costly" ^{[9, p. 35]}.

At the same time, the study of tax functions cannot be carried out independently of each other, since all functions are interrelated and inseparable from each other, and their separation is rather conditional: the signs of one function are inevitably present in another function.

By analyzing the existing tax functions, it can be concluded that the tax function itself is nothing more than a certain direction of legal tax regulation that develops naturally in the process of standard-setting activities, aimed at achieving certain objectives through the use of a set of economic and legal instruments.

The implementation of the regulatory function of taxes is one of the most important areas of financial policy in Russia, which affects most aspects of society. At the same time, the impact on subjects of public relations in itself is indirect, since the introduction (abolition) of taxes, as well as the introduction of special taxation conditions, stimulates (discourages) certain behavior of such subjects in areas of public life that are not themselves the subject of regulation of tax law. This is confirmed by the position of D. V. Tyutin, who notes that "activities that the state seeks to indirectly regulate through taxation do not necessarily have to be taxable (in particular, they do not have to be economic in nature)" ^[22].

The distimulating effect can be exerted due to "limitation and displacement" ^{[25, p.28]}. In particular, in the USSR, tax instruments were actively used to suppress some social relations and stimulate others by "differentiating tax rates for different social groups" ^{[25, p. 29]}. In fact, non-tax relations are regulated through tax regulation. At the same time, it should be noted that currently, following the results of the tax reform in 2024, it is also possible to observe a differentiation of tax rates for both businesses and citizens: the introduction of preferential tax conditions for families with children, reduced rates for certain business sectors, and others.

In this case, it is important to note the fact that the implementation of the regulatory function of the tax occurs without the use of methods of coercion peculiar to public law, on the contrary, tax regulation does not actually restrict subjects of public relations in behavior, but only stimulates economically to the model of behavior that is necessary for the state by reducing the amount of funds withdrawn to the state budget or by increasing the amount of such funds, in case the purpose is to suppress any behavior.

First of all, taxation has a regulatory impact on the economic sphere, the foundation of which is entrepreneurial activity, including small and medium-sized businesses. "The modern understanding of the regulatory function of taxes is related to the fact that this function is designed to solve certain tasks of the state's tax policy through tax mechanisms, and also assumes the influence of the tax system on economic processes and trends in society. Through the tax mechanism (tax rates, a system of benefits, tax deferrals and forms of tax credit, etc.), the state can regulate the investment activities of business entities, the entrepreneurial activity of individuals, etc." ^{[21, p. 49]}.

At the same time, it is impossible to deny the fact that it is tax regulation that largely influences the development of entrepreneurial activity. Thus, by introducing reduced tax rates, introducing special economic zones and creating special tax regimes for certain business sectors, the state will help increase the number of business entities in this particular sector, and, on the contrary, tax disincentivement of certain business sectors will lead to a decrease in the number of entrepreneurs in this sector. Therefore, despite the fact that benefits are an optional element of taxes, they are able to stimulate entrepreneurial activity quite effectively. In Russia, additional incentives in the form of tax benefits are provided to such areas as agriculture (a separate special tax regime), education, medicine – these organizations enjoy benefits in terms of paying income tax, the IT sector, and others.

Based on the analysis of the above classifications of tax functions, as well as the subfunctions of the regulatory function of the tax, it is necessary to identify the following subfunctions of the regulatory function of the tax:

- stimulating;

- distimulating;

-incentive;

- auxiliary.

At the same time, it is necessary to disclose the essence of these subfunctions in accordance with their implementation in the legal field. Thus, the incentive sub-function is the dominant one among the others, since one of the main mechanisms for implementing the regulatory function of a tax is to directly stimulate a particular type of activity. Basically, such a sub-function is implemented in the field of entrepreneurial activity, in the case when there is a need to develop the economy by increasing the pace of production and the development of technical and economic progress. Currently, such areas of activity can be called the industrial complex, information technology, military-industrial production and others. By providing these sectors of the economy with more attractive tax conditions, both the development of existing organizations in this area and the creation of new ones are stimulated.

Disincentive is designed to carry out exactly the opposite activity by imposing an additional tax burden on those branches of business activity, as well as the behavior of subjects of tax relations that are regarded by the legislator as undesirable in order to curb such processes. As an illustration of this sub-function, the introduction of excise taxes on alcohol, tobacco and sugar-containing products can serve, which leads to an increase in the costs of commodity producers, as well as the final cost of selling such goods, which should ultimately contribute to reducing the consumption of such goods by the population, which have a negative impact on health.

The incentive subfunction is characterized by the absence of significant economic benefits for the taxpayer, however, it is a symbol of socially acceptable behavior that is economically rewarded. And if the stimulating sub-function has as its main purpose precisely the increase in capital released through the use of optimized taxation mechanisms, which are provided directly by the legislator himself, then in this case the use of tax benefits will not entail significant economic profit. Standard and social tax deductions can be designated as such mechanisms. Thus, tax deductions for education, medical treatment, and gym attendance are not the main incentives influencing the decision to receive education or undergo medical treatment. This mechanism also works in the case of providing various tax deductions and benefits for families with children. The birth of a child is not a consequence of the tax deduction provided by the legislator. On the contrary, by introducing various tax incentive mechanisms, the legislator thus approves and, accordingly, encourages this behavior, which is socially significant for demographic policy.

The auxiliary sub-function, it seems, is not permanent, but is carried out by the state in times of crisis, in economic situations in which the use of standard and already existing tax support mechanisms is insufficient. In Russia, the periods of the COVID-19 pandemic, as well as the period of sanctions pressure in connection with the special military operation conducted by the Russian Federation, are a vivid illustration of this. Due to the fact that these events provoked economic crises and the need to rebuild the economy, the legislator provided for various tax support mechanisms that were used exclusively in unfavorable economic conditions, and were canceled during the normalization of the economic situation.

These sub-functions collectively constitute the regulatory function of the tax, despite the fact that they do not pursue the same goals, but they are globally based on tax regulation, which excludes sanctions and any public coercion, and is aimed specifically at indirectly influencing economic and social processes in the state.

In addition to benefits, there are other mechanisms for reducing the tax burden for various categories of taxpayers. Thus, for certain categories of entrepreneurs, full or partial exemption from paying tax payments is possible, and the subjects of the Russian Federation are granted the right to establish "tax holidays", including exemption from paying certain types of taxes is established for categories of citizens who, as a rule, are defined by the legislator as socially vulnerable social strata. This thesis is confirmed by the position of A. A. Titov, according to whom, "a more complete use of such elements as the rate and benefits can have a serious impact on tax regulation in the economy, the pace of economic growth, investment attractiveness for potential investors and an increase in GDP" ^[20].

Russian legislation also provides for the possibility of postponing tax obligations to a later date by granting deferrals, installments, and investment tax credits.

When implementing tax benefits as an optional element of a tax, the regulatory function of taxes comes into some contradiction, which poses a certain risk when the state makes decisions on regulating tax relations. Thus, the fiscal function is implemented through the implementation of control and supervisory measures and sanctions, while the regulatory function, in turn, aims to free up additional capital through the use of tax incentives or to reward government-approved behavior. Ideally, these two functions should be in balance, however, in practice this almost never happens, as the state strives to maximize the collection of tax payments, and tax subjects to minimize tax withdrawals. As K. A. Tasalov correctly noted, "the regulatory function is in a complex relationship with the fiscal one — in some cases it can be opposed to it, but it can also contribute to its implementation" ^[17].

Speaking about the nature of tax policy in Russia, it is the fiscal nature of tax policy that should be noted. This is evidenced by the significant predominance of indirect taxation, since traditionally the regulatory function is implemented through direct taxes. Direct taxes, including income tax and personal income tax, contain the greatest potential for regulatory impact on the pace, scale and directions of investment activity. In combination with the depreciation policy, the income tax determines the size of the economic entities' own financial resources, which can be used to ensure further growth and, ultimately, forms a significant part of the investment potential necessary for economic development. As M. N. Karasev notes, "a flexible combination of fiscal and regulatory principles of taxation is ideally the essence of modern tax policy" ^[7].

Strengthening fiscal policy does not solve the problems of tax control, but only leads to the fact that tax payers begin to consider the tax burden excessive and look for ways to evade their payment, which, in turn, contributes to the development of the shadow economy. As O. N. Golovchenko notes, "it is necessary to maintain a balance in the implementation of the tax policy of the Russian Federation so that the tightening of the tax regime for individual business entities does not lead to an underestimation of the tax base, avoidance of taxation or liquidation (bankruptcy) of the organization" ^[5]. All this is due to a certain weakness of the regulatory function within the framework of modern tax regulation, since tax regulation is concentrated at the federal level, which leads to a lack of authority from the regional authorities in regulating taxation. Thus, the economic situation in each individual region is not adequately taken into account, which, with large territorial coverage and economic heterogeneity of the country's subjects, reduces the effectiveness of tax regulation of business activities. On this issue, the thesis of E. V. Ryabova is fair, who writes that "the need to implement the regulatory function of taxes to the maximum extent possible pushes the legislator to actively change tax law by establishing tax incentives, special tax regimes, investment tax credits and other tax and legal instruments that stimulate investment activity" ^[16].

The effectiveness of legal regulation of taxation directly affects the development of the state's economy, allowing through various instruments of tax regulation to influence the investment climate of the country, as well as freeing up additional resources from business entities to modernize production and create additional jobs. Thus, "in a free market economy, tax remains an effective means of influencing the state on public relations in order to give their development the desired orientation for the state" ^{[14, p. 75]}.

At the same time, by introducing preferences for taxpayers, including in the form of special tax regimes, the legislator faces the task of creating a sought-after mechanism for reducing the tax burden that will be popular among entrepreneurs and individual taxpayers and have real practical applicability, otherwise there will be no stimulation of economic development.

At the same time, it is necessary to understand that the tax benefit cannot be considered as an independent business goal ^{[19, p. 197]}. In this regard, if, by way of judicial review, it is established that the taxpayer intends to make a profit mainly or only at the expense of tax benefits, in the absence of an intention to carry out real business activities, the taxpayer entrepreneur will be deprived of the opportunity to take advantage of this preferential measure. In addition, this fact, recognized by the court, will also lead to the calculation of arrears, penalties and fines.

Conclusions

Thus, the regulatory function of the tax is the most important function for creating a favorable economic climate in the state. With its help, the state can stimulate the development of priority areas of entrepreneurial activity, influence demographic policy and other socially important processes, as well as restrain the development of certain business areas that are not of priority importance to society and the state.

In order to create a favorable economic and investment environment for business development, it seems that fiscal and regulatory functions should be in some balance, without critical advantages both in one direction and in the other. This is primarily due to the fact that, as I. I. Yanzhul noted, "the fiscal interests of the state cannot be satisfied without taking into account the actual capabilities of the taxpayer, without reducing the standard of living, without undermining other opportunities" ^[26].

Based on the results of the study, it should be concluded that the regulatory function of the tax is equivalent to the fiscal function, however, it cannot be said that the regulatory function occupies a dominant position, since the tax itself exists in order to obtain funds to replenish the budget. Nevertheless, the regulatory function of the tax is the basis for creating a favorable economic and investment climate, as well as a way to regulate social inequality through the implementation of both stimulating subfunctions of both the main and the subfunctions of a disincentive, incentive and auxiliary nature.